Ethereum Ventures LLC has filed a lawsuit against Chet Mining LLC in an attempt of “piercing the corporate veil.” Ethereum Ventures has also sued Chet Stojanovich who according to them, is the sole member and manager of Chet Mining. The plaintiff states the Chet Stojanovich did not maintain corporate formalities and hence allowed the corporate to become undercapitalized.
Corporate entities have some advantages over individuals as they can assist from a tax standpoint and protect people from personal liabilities. From a legal standpoint, a corporation is a person that can be sued, own property, bank accounts, and enter contracts. Moreover, as it exists as a separate person, the managing person cannot be held accountable for the things done by a corporation.
However, for it to exist separate from the person, a general set of rules is to be followed. A person must act like it is a separate entity by keeping separate books. Furthermore, the person needs to fulfill corporate formalities, keep separate financial records, and not mix corporate funds with individual funds.
If a person breaches these rules and a problem arises, the other party can argue that the person is the corporation and hence responsible for all things done by the corporation. This is known as “piercing the corporate veil.” In this case, the defendant becomes responsible for every contract signed by the corporation, among various other complications.
In the current lawsuit between Ethereum Ventures LLC and Chet Mining, the plaintiff claims to have paid for mining equipment that was not delivered. Moreover, the plaintiff has not received any refund either.
Furthermore, the plaintiff wants the defendant to pay the amount paid by them as well as for the damage caused by lost profits. The lost profit damage is stated to be slightly more than a quarter-million dollars ($272,000).
This is not the first time a party has been charged to pay for the recovery of lost profits in connection to mining equipment. However, whether the plaintiff is successful at piercing the corporate veil remains to be seen.